GBL 395 Examination 2 Flashcard Set

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Our legally protected rights and interests in anything of value that is subject to ownership.
An item of tangible movable or immovable except real estate and things connected with real property.
Real Property
And subset of land that has been legally defined and the improvements to it were made by human efforts:  Any buildings, machinery, wells, damn, ponds, mines, canals, roads, etc.

Includes the surface, air space (unlimited height), subsurface (including salt, gold, oil, silver, etc.), and includes things permanantly attached to land (buildings, structures, fixtures).

Note: Personal property can be turned into real property.  If lumber is left on a lot, it is personal property.  If it is used to make a fence, it is then real property.
Personal Property
"Private property."  It is moveable.

AKA "Personalty" or "Chattel"
Transferring less than the remaining duration on a lease to another person.
Transferring the entire remaining lease to another person.  If a subletter makes damages and you move back in, you might be held responsible.  With assignment, you would not be.
A temporary transfer in possession and control of personal property to another person.  Does not transfer title.  Transfers include: Shipping goods (fed ex), Lending or Renting objects, giving clothes to the dry cleaners, giving your car keys to a valet.
Owner who is transferring possession to another person.  
Bailee and their responsibilities
The person receiving temporary possession of property. They must care for the property and prevent damage.  Must also return the property in the agreed upon condition with the exception of FUNGIBLE GOODS.  Bailee may use the property per terms of the agreement.  Use is limited to necessity if agreement does not address use!
Fungible Goods
Goods that are indistinguishable from other goods of their kind.  Ex.  Salt, sand, grain.  Bailor won't get the exact same good, but the same quantity and quality.
Bailee Liability for Damages
If the bailment benefits only the bailor, the bailee is liable only for gross neglect.  Ex. Storing a friends RV in your extra lot.

If the bailment benefits only the bailee, the bailee is liable for even slight negligence.  Ex.  Borrowing a friends truck.

If the bailment benefits both the bailor and bailee, the bailee is liable only after lack of reasonable care.  Ex. Storing a boat for a friend, who is paying you.
Buildings and structures
Improvements to land are considered buildings.  Structures and buildings are permanently attached to land.
When real property is sold:
  • The buyer takes posession of the real property
  • The seller retains the personal property (furniture, appliances, etc.)
When real property is leased:
  • The landlord retains the real property (even fixtures the tenant installed!)
  • The tenant takes the personal property
Exception: Trade fixtures.  Fixtures made where a business is renting space can be taken if they are pertinent to the business.  Ex. Iced cream maker.
Possessory Interests in land
Having an interest in real estate because you own it.

Two types:
  1. Freehold Estate
  2. Leasehold Estate
Fee Simple Absolute (Freehold estate)
  • Most common type
  • You have more rights to the land than anyone else in the state
  • Can own, occupy, farm, use, mine, harvest, convey, improve, lease.
  • Can control who owns the property after you die.  In your will you can "devise" it to someone.  Any property in a will is a testamentory gift
Free simple defeasible
The grantor attaches a condition to the conveyance of land.  The grantee loses ownership if they fail to meet the condition, in which case the land goes back to the grantor or their heirs.
Seller or giver of land
Receiver of land by gift or purchase
Differences between devising and bequeathment
Upon death, personal property is bequeathed and real property is devised
Life estate
  • Owner called a "life tenent"
  • Owner has many rights of fee simple absolute, but CANNOT DEVISE LAND AFTER DEATH.
  • You can give the land to a grantee, but their ownership ends when they (the grantee) dies.
In that case:
  • Reversion- Land goes back to grantor after grantees death
  • Remainderment- Land goes to a third party upon death of grantee.
Concurrent estates in real property

See keg 6
Three types
  • Joint tenancy
  • Tenants in common
  • Tenancy by the entirety
Joint Tenancy
  • Owners must have equal interests
  • Owners are free to sell their interest without permission
  • Creditors can take debtor's interest
  • Owners CANNOT leave their interest to heirs
  • Upon death, ownership goes to the surviving co-owners in equal portions
  • ^This is called "Right of Survivorship"
Tenants in Common
  • Freedom to sell ones interests without consent
  • Creditors can take debtors interest
  • Owners CAN leave their interest to heirs by devise.
  • Owners CAN have unequal interests (though they can be equal).
Tenancy by the Entirety
  • Permission is required to sell ones interests
  • Creditors of only one debtor CANNOT attach any interest.  Ex.  If your spouse has large debts or is reckess with money, the bank could not take your assets or place leins on your property.
  • Owner CANNOT dispose of his interest by will
  • Co-owners MUST be married.  Two owners.
  • A divorce converts the ownership into a tenancy in common.
Leasehold estates

*The lessee has exclusive ownership*
Four types
  • Tenancy for years
  • Periodic tenancy
  • Tenancy at will
  • Tenancy at sufferance
Tenancy for Years
  • Any fixed period of time, as long as it is fixed.
  • Start and end date are stated.  If no end date is stated, it is not tenancy for years.
Periodic Tenancy
  • Automatically renews for the duration of the lease
  • One party must warn the other of planned termination.  If they warn too late, the lease renews.
Tenancy at Will
  • Either party can terminate at any time.  Must give notice as per the terms of the lease contract (ex. 30 days).
Tenancy at sufferance
  • Tenant stays in the property after the lease has expired.  They don't move out.
Non-possessory interests in land
1. Profits
  • A right you purchase to enter someones land and take things from it (lumber, deer, mine)
  • Right of privelege to enter someones land, but you cannot take things from it.
  • You put limitations to keep things under control.
  • Stores and businesses automatically grant this right to the public when they open.
Easements (own card)
The right to use another person's land.

Dominant tenement- The land owned by the user.  It benefits from the use of someone else's land.

Servient tenement- The land being used.  Land benefitting other land through its use.

Appurtenant- Benefits adjacent land.

Note: The servient and dominant tenements are usually adjacent, and describe the land itself, not the owners of the land.

Note: Easements are permanent, even with transfer of property.
Easements (continued)
Easements in gross- Adjacency is not required.
  • Usually benefits many landowners
  • Ex. Telephone pole/lines.
  • ^City/owner does NOT own land, only the easement on the land.
Positive easements- Allows use of land.  AKA affirmative easements.

Negative easements- Prevents use of land.
  • Can prevent landowners from using their own land in a certain way.  (Can't build above a certain height)
  • This can be used to protect views or solar panel exposure.
Creation of easements
Three ways
  1. By express grant and express reservation
  • Granted and reserved rights are stated in the deed that transfers property ownership.  SEE FIG. 1
2. Implied easements- Easements created by necessity, they last as long as the necessity lasts.  SEE FIG. 2

3. Easements by prescription.  ALL FIVE must be met.
  1. Use the land of another
  2. Use the land open and notoriously (the owner must know and can object)
  3. Use the land continuously
  4. Use the land exclusively (you must be the only one).
  5. Use the land in an adverse and hostile manner (the landowner must object to your use).
Note:  In MI, you must have been doing the above things for 15 years in order to get an easement.  Granting temporary permission for someone to use your land takes away your objection, and therefore an easement by prescription cannot occur.
Events causing owner's loss of possession
Two ways.

1. Adverse possession-
  • Same reqs in MI as prescriptive easements.  Involuntarily transfers possessary rights of land from one to another.
2. Condemnation-
  • Government has constitutional power to take privately owned land.  Called power of eminent domain.
  • They must provide fair compensation for the owner (fair market value of the land)
  • Public purpose for the land such as roads, parks, public buildings.

Differences between adverse possession and easement-
  • Easement is use of another's land, you only aquire the right to use the land
  • Adverse possession is occupancy of another's land.
CASE: David Lucas v. South Carolina
D.L. bought property on a S.C. beach with the intention of building 2 houses, one for himself and one to sell.  Gov't then passed a law banning beachfront construction.  He said it was like a taking because they limited his use of the land.  Went to supreme court, they ruled that S.C. owed him $1.2m, but did not get ownership of the land.  This was the value the land decreased by because he could not build.
Nuisance law as a restriction on land use
Public nuisance-
  • A landowner's conduct that interferes with the health and safety of the public in general.
  • Only public officials can bring a suit for public nuisance, citizens cannot.
  • Ex. Smokestacks being harmful.
Private nuisance-
  • Ex. Your neighbor's dog constantly barks, or your neighbor raises pigs and it smells.
  • Legal remedy (money damages)
  • Equitable remedy- Eliminate the cause (filters on smokestacks) or stop the conduct (shut down factory)
Government land use restrictions
Two ways-

1.  Zoning-
  • Isolates businesses from homes
  • Restricts construction to specific types
  • Regulates pop. density and how many people can live in houses.
  • Dictates land layout.
2.  Statutes-
  • Controls the appearance of property
  • Might restrict business signts to no more than a certain size, height, or distance from the curb.
  • Note: Only businesses with at least 100 feet of property along a major road can have a freestanding sign.
Notes on Zoning-
R2, R3... Rn denotes how many unrelated people can live in a house. A family of 15 can live in an R4 house because they are related, but 4 friends could not live in a 5 bedroom house if it is zoned R3. 
The final formal step in the sale of real property.  It refers to the closing of escrow, which was opened when the purchase process began.
A transfer of the title to real property by sale or gift
The instrument or document of conveyance of title to real property from one person to another
Restrictive convenant
A restriction on the use of land attached to the deed which future owners must obey.  Covenants that perpetuate discrimination against minorities are unconstitutional.
Refers to the rights of owners of land adjacent to water
The abuse, neglect, or destructive use of property by one who is in rightful possession.  It is a tenant's duty to not commit waste.
Intellectual Property
Intangible form of personal property; could be a company's most valuable asset which sets them apart from competition.

Five types-
  1. Copyright
  2. Trademark
  3. Trade dress
  4. Trade secrets
  5. Patent

*Exclusive federal court jurisdiction*
The exclusive right to reproduce, publish, and sell a fixed form of a creative work of art
  • Lasts for 70 years after the creator dies
  • If it is owned by a corporation, it lasts for 125 years from the time of creation

Things that CANNOT be copyrighted-
  • Titles
  • Type fonts
  • Ideas (groupon can only protect name & logo)
  • Facts (sharing knowledge is encouraged)
  • Words or short phrases
  • Familiar symbols or designs (smiley faces)
Requirements for a copyright
  • Fixed form indicating time of creation and the name of the creator
  • Original
  • Creative
Exception to copyright protection: Fair Use is not copyright infringement.  Examples:
  • Research
  • Criticism and comment
  • Parody
  • Teaching
  • Personal multiple uses (burning yourself copy)
  • Convenience recording (DVRing shows)
Conduct that is NOT considered fair use:
  • Playing a recording in a store
  • Playing recorded games in a sports bar
  • Broadcasting recorded music
  • Presenting a play (includes writing a play about a book or writing books about movie stories)
  • Performing a song live
  • Selling course packs

*Exclusive federal court jurisdiction*
A distinctive identifier used by a manufacturer or seller to identify its products and distinguish them from the products of its competitors.  Must be defended or it becomes public domain.
  • A word/name.  Ex. Xerox, Pentium, Ultima II.  Ultima II is a lipstick and a video game, but you cant restrict other companies from using the term if it is for an unrelated product.
  • A picture.  Ex. The coppertone girl and dog
  • Mascots
  • Slogans.  Ex. Nike, just do it
  • Symbols (logo)
  • Shape-  Ex. Yopllait cone shaped container, cokes glass bottle
  • Sound- Ex. Roaring MGM Lion
Note: Harley Davidson gave up rights to their sound

Distinctive identifiers preventing trademarks
  • Functional shape- makes shipping easier.  To prevent monopolies
  • Functional color- John Deere tractors (farmers like to match) or black outboard motors (matches all boat colors)

Note: The best way to defend a trademark is to inform the public- Kleenex brand tissues, velcro brand adhesive, rollerblades, xerox copies, Levi's.
Brand names made generic by public usage
  • Cellophane
  • Yo-yo
  • Trampoline
  • Corn flakes
  • Dry ice
  • Lanolin
  • Escalator
  • Cube steak
  • Aspirin
  • Linoleum
  • Kerosene
  • Zipper
  • Nylon
  • Raisin bran
  • Cola
Trade Dress
The non-functional features, characteristics, decorations, or image of goods or services that promote their sale and distinguish them from their competitors.

-Color of packaging
-Appearance of the building (white castle: no function, but unique identifier)
-Theme of a restaurant
-Decor of a business
-Style or type of service
Trade Secret
Any secret formula, pattern, process, program, device, method, technique, or compilation of information a business uses that gives it an advantage over its competitors who do not know or use the secret.  Ex. Coca Cola formula, KFC's herbs & spices.

-You CAN take a sample of a product and dissect it in a lab to find the components, and can then manufacture as similar of a product as you can manage.  Called Reverse-Engineering

-You CANNOT aquire the trade secret through unethical means.  Including hiring someone to find the secret, bribing those involved, wire or computer taps, trespassing, breaking and entering, working to high up in the company then leaving when you learn, etc.
A monopoly the government grants to inventors allowing them to exclusively make, use, and sell their inventions.
- The U.S. granted its 7 millionth? patent recently
- Protects from copying for up to 20 years.  Either 14, 17, or 20.
- Since a monopoly is granted, if there is a huge demand for a product and the owner cannot supply enough, they can contract other companies to manufacture it and then collect royalties.

Requirements to obtain a patent-

1. Novel
- Not described in print
- Not previously patented
- Not in use or being sold
- Cannot simply be an idea, must be a working model

2. Useful, distinctive, or ornamental
3. Non-obvious

Creations that CAN be patented
- Processes (how a company applies stain guard)
- Machines
- Chemical compounds (medicine)
- Improvements of processes, machines, compounds, and certain business methods
- Plants produced by asexual reproduction
- Ornamental designs for an existing product

Things that CANNOT be patented
- Naturally occuring things
- Abstract ideas
- Scientific or mathematical concepts
- Computer programs (unless part of a potential process, which could be covered under copyright or trade secret)

Note:  MSU has two patents (they were developed on campus) for renound cancer drugs, which have made over $200m in royalties for MSU.  MSU gets about 100 patents per year.
- Cisplatin
Contracts (the six elements to form one)
Elements of a contract- All of these must be present to form a valid contract

- Offer
- Acceptance
- Consideration
- Genuine assent
- Competent parties
- Legal object
The proposal of a bargain (exchange of two things) to another party.

Intent- Did they intent to make good on their promise?  Intent is decided by the following:

1.  Words- Must not be ambiguous or equivocal.  Ex. Offering to buy a "car" for $10k is not an offer, much too ambiguous.  Note: It is dangerous to have ambiguous words in contracts.  If the dispute gets taken to court, they will always rule in favor of the person who did not draft the contract.

2.  Conduct- How were they acting when they spoke?  This is decided by the "Reasonable Persons Standard"- Would a reasonable person interpret an offer as being realistic?

3.  Definite (specifics of the offer)- Subject matter, quantity, price

4.  Must be communicated to the offeree.  If you return a dog to the owner and then see a reward poster, you do not get the reward because you were unaware of it (most states).  In some states they make you pay, but not because of any contract, but because you were prepared to.

Note: Ads are not offers unless terms leave no room for negotiation.  A car ad showing a price of $20k is not an offer or contract.  It is simply an invitation for a customer to come make an offer of $20k.
Terminating Offers
Cannot be accepted after termination

-Terms of the offer (states expiration time)

- Lapse of time (Dies a natural death after a reasonable length of time, usually 30 days).  An offeree can purchase an option, which forces an offeror to keep an offer open until their expiration date.

- Insanity or death of offeror

- Destruction of subject matter.
Ex. Truck of tomatoes/parishable goods.  A house burning down depends on the timing.  If it occurs between the offer and the acceptance, not enforceable.  If after offer and acceptance, valid.

- Offeree rejects the offer, cannot change your mind

- Offeree makes a counter offer, offers less

- Offeror revolks the offer.  Offer can be revolked even if an expiration time is stated, though must be before it is accepted.

- Supervening illegality.  An offer is made, then a law is passed making the transaction illegal.
- Must be intent to accept

- Acceptance must not change the material terms of the offer (essentially a counter offer)

- Only the offeree can accept the offer (someone overhearing it cannot accept)

- Acceptance must be communicated to the offeror (some form of "affirmative conduct", like a handshake)
Legal value, bargained for and given in exchange for an act or a promise.

- To enforce a promise, both parties must stand to give something up

- Each party must suffer detriment.  It must be legal.  A 19 year old cannot promise to not drink anymore in exchange for something, they are not using valid detriment.

Detriment- A loss of something of legal value, such as the the right to do / don't do something.
Promissory Estoppel
Must have all three of these requirements:

1. A promise reasonably expected to induce promisee's substantial action

2. Promisee's justifiable reliance on the promise to compensate for his detriment

3. A resulting economic detriment that can only be avoided by enforcing the promise

Example- A grandfather offers to pay his granddaughter a sum of money monthly.  Knowing this, she quits her job.  The grandfather stops paying, and she has suffered loss.  He will be made to continue payment.
CASE: Thorne vs. Deas (1809)
John Thorne owns a ship with 3 partners and they rent it to others.

John says he will get insurance for the ship, but forgets.

The ship sinks, and the partners ask John about the insurance.

The partners cannot sue John because they made no promise in return for him offering to get insurance.
Quasi Contract
Court enforced liability against any party who knowingly accepts a benefit not contracted for.

Ex. Allow someone to paint your house when you know they shouldnt be.  Court will make up a contract after the fact to prevent an injustice from happening.  
-  The party is liable for the reasonable value of the benefit (might not be sales price)
BUT, if unaware of the service, no payment is needed.

Unjust enrichment- Taking advantage of someone else's mistake.
Genuine Assent
Four events prevent genuine assent.

1. Fraud
2. Duress
3. Undue influence
4. Mistake
Four elements to prove fraud.

1. Misrepresentation or omission of material fact (a detail important enough to change someone's mind about entering a contract)

2. Intent to deceive the other party

3. Other party relies on the misrepresentation (the lie must influence the decision of the party)

4. Reliance causes injury- By relying on the lie, the innocent party experiences a loss (usually financial)
CASE(ish): Jody Berry v. Hooters
Company owned 11 Hooters franchises, told all waitresses that the best seller of a brand of beer from each location would be in a raffle to win a Toyota.  Jody won the raffle, but they gave her a "Toy Yoda" action figure.
She filed suit for fraud and breach of contract.
Hooters was losing business from bad press so they bought her the Toyota, the case never went to trial.
- A party threatens another to force him to enter a contract (physical, economic, emotional harm)
- You agree to a price you know is unfair because you are under duress, afraid, and have no options
- Called gouging.  Gas stations sometimes all inflate in crisis times, but they do not collaborate, but mirror eachother
- There is no reasonable alternative to entering the contract
Undue influence
There is often a fiduciary relationship (trust) between the parties
- One party is usually in a subservient role, commonly caregiver/patient.
- Ex. Nurse convinces man to leave his assets to her in his will.  Might threaten to stop providing the man with his needed medications until he puts her as the beneficiary in the will.
- The dominant party takes advantage of a weakness to persuade the servient party to enter a contract
Two kinds.

1. Unilateral mistakes
- One party makes the mistake and neither is aware of the mistake.
- Recission is NOT allowed, unless the non- mistaken party did know of the mistake and takes advantage of it.  Must prove the the party knew of the mistake.

2. Bilateral mistakes
- Both parties made the mistake
- Recission IS allowed by either party, with the exception of mistakes of value
- If both parties are mistaken about the value of an item purchased, recission is NOT allowed.  Buyer and seller should be 100% sure of the value they are negotiating.
Competent parties
In order to enter contract, both parties must be competent, meaning they must understand they will be legally obligated to perform the contract.

Barriers to competency are:
- Sobriety
- Sanity
- Age

Minors cannot disaffirm contracts for necessaries (things they need to live)

- If a contract is formed between a minor and an adult, the minor can decide later on if it is valid or not.
^Called a voidable contract, the minor can disaffirm the contract until they turn 18.
- Adults cannot disaffirm contracts with minors
- If a minor keeps a contract, it is ratified

Ex. A 16 year old could buy a car, use it for a year and a half, then void the contract.  This will allow them to return the car (in the current shape) for a full refund.
Legal Object
Contracts are void if they are unlawful.

Contracts that violate statutes or case law:

Blue laws- The jurisdiction doesnt allow a contract to occur (sale of alcohol Sundays before 2pm)

Licensing statutes- Requires various professionals to be licenced (prevents harm)

Laws against usury- Ceiling on charge cards, loans, rent, etc.  Cannot exceed the max allowed rate or commiting usury.  CAN exceed max rate if dealing with someone with poor credit, taking a greater risk.

Laws restricting gambling- Restricts types allowed in States.  Contracts involving illegal (including online) gambling are void.  Whether you win or lose, it cannot be enforced.

Contracts that violate public policy:

Business-to-business non-compete pacts- Competition allows growth.  An Ancillary agreement says that I will not sell my company and then start a new one to do the exact same thing.

Employment non-compete agreements- Clause limiting the employees abilities, CANNOT be indefinite (usually 1 year).  Also, geography matters (if you move across the country you could most likely work again).  Time and geography issues are decided by what is a "reasonable" restraint.

Price Fixing agreements- Not allowed.  You can copy other prices, but cannot discuss and agree on a price.
Three types of Contracts
Unilateral- Contains a promise by only one of the parties
- Ex. Promising to pay someone $20 for each time they mow your lawn.

Bilateral Contract- Both parties promise something.  Can sue for damages if one party does not meet contract terms.

Third Party Beneficiary Contract- (own card)